The Courier

Bernal (right) signing the EPA agreement with Karl Falkenberg, the Deputy Director General for Trade at the European Commission. To the rear, Kusha Haraksingh, lead negotiator on EPA legal issues with the College of Negotiators.

© Wayne Lewis

To what extent is the EPA’s successful conclusion due to the CRNM?

The CRNM has had a coordinating role in facilitating the development of regional negotiating positions. Such coordination has included facilitating consultations with stakeholders, research and technical work. The successful conclusion of the EPA is owed therefore in part to the technical labour undertaken by the negotiators and the CRNM, but more importantly to the Member States, which were ultimately responsible for determining the negotiating mandate and guiding the negotiators throughout the process.

 ‘Machinery’ implies an onward march, no matter what.

When one gets into one’s car, there is a reasonable expectation that the car will start once the key is engaged. Similarly, the expectation of the negotiating ‘machinery’ is that it too will function properly and consistently as the nature and scope of CARIFORUM foreign trade policy evolves.

Did you feel rushed into signing up for an EPA?

The implications of the elimination of the non-reciprocal trade preferences under the Cotonou Agreement were very real for our region. The three principal options were to resort to the Generalised System of Preferences (GSP), to negotiate a new market access arrangement for goods only, or to negotiate a complete EPA.

The region, recognising the market potential in services and investment, decided that a full EPA was its best option. The negotiations were completed on 16 December 2007 not because of external pressure, but rather because the negotiators and the heads were confident that the Agreement was a good one and that the mandate had been achieved.

Is the EPA challenge-proof in the WTO?

In law, successful litigation is generally dependent upon two variables: the interpretation of the law and the credibility of arguments presented by the challenger and by the defence. The WTO is no exception. Therefore, it is possible that challenges to the EPA from WTO membership could arise. Some elements of the rules of the WTO are ambiguous and have not been conclusively tested and interpreted within WTO jurisprudence. This ambiguity facilitates avenues for challenge, especially from competing developed countries and non-ACP developing countries. At the same time, legal ambiguity provides latitude for liberal interpretations and the application of the legal principle.

The whole purpose of entering into negotiations was an arrangement which, in contrast to the Cotonou preferences that required a waiver, would be compatible with the rules of the WTO. We have been careful to negotiate an Agreement that would secure our trading interests but that could survive legal scrutiny.

What are the benefits of the EPA for Caribbean people?

One of the most immediate benefits of the EPA is that it allows CARIFORUM to avoid facing the GSP, which would have been significantly less advantageous than the EPA. Certainly key CARIFORUM industries, such as the banana industry, would have suffered if no EPA was in place because there is no coverage for bananas under the GSP.

Additionally, in the short to medium term, tariff reductions could lead to the depreciation of some prices of goods and services, which may result in savings to the consumer. Falling retail prices would also lower the production costs of CARIFORUM producers whose production processes and inputs are highly dependent upon imports.

In the long term, the EPA secures CARIFORUM preferential market access to Europe, across both traditional and new sectors in goods and services in a form that is consistent with WTO rules.

What about the tariff revenue losses for ACP governments?

The commitment to liberalise means that both CARIFORUM and Europe will have to remove import duties from certain goods. This will lead to a loss of revenue originating from these tariffs. CARIFORUM is expected to liberalise as much as 80per cent of all goods imported from Europe. However, the commitment to remove tariffs is not immediate for CARIFORUM. Whereas Europe is expected to immediately remove duties and quota restrictions for all goods except rice and sugar, CARIFORUM is allowed several phasing schedules before it is necessary for products to become completely duty free. For some products, CARIFORUM is allowed to delay liberalisation by 5, 10 or 15 years, and in some other cases up to 25 years. Furthermore, the EPA provides a list of products which will be exempted from liberalisation.

Under a trade agreement like the EPA, it is expected that any revenue losses will be compensated by capitalisation of the market access opportunities available to firms. However, CARIFORUM adjustment to revenue loss caused by liberalisation can be realised further by reforming tax systems with the aim of transitioning away from taxes that impede trade flows to other forms of taxation.

What sort of development aid is needed to underpin the EPA?

Successful implementation of the Agreement within CARIFORUM hinges upon the expression and implementation of financial and non-financial development support and cooperation.

The EPA’s development support measures and priorities are broadly outlined in a chapter on development but are more specifically detailed in individual chapters related to the particular trade subjects under the Agreement. Defining the formulation and implementation of specific development support projects must be preceded by a process of needs assessment. This process of needs assessment, though not complete, started even before the conclusion of the EPA negotiations. The evaluation of the costs of implementation will be determined through this process. It is up to the Member States to determine what these projects will be.

And the monitoring?

Monitoring of the implementation of the EPA is to be facilitated through participatory processes at the national levels of CARIFORUM and Europe. However, the EPA also includes certain institutional provisions. Such provisions include the establishment of the Joint CARIFORUM-EU Council, the CARIFORUM-EU Trade and Development Committee and the CARIFORUM-EU Parliamentary Committee.

For further information, go to www.crnm.org and www.eu.europa.eu/trade

* CRNM Director-General
** CARIFORUM is the Caribbean Forum of the African, Caribbean and Pacific Group of States, which includes members of the CARICOM regional grouping: Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti,
Jamaica, St Kitts and Nevis, St Lucia, St Vincent, Surinam, Trinidad and Tobago, the Dominican Republic and Cuba. The EU initialled an EPA on 16 December 2007 with all CARIFORUM States apart from Cuba.